There are lots of different types of investments and therefore lots of different options with regards to what you might like to go for if you are choosing an investment. There is one main decision that you need to make though and this is whether you want high or low-risk investments. This might seem like an easy decision but it is worth noting a few things before you make that decision.
There is no Such Thing as a Risk-Free Investment
It is good to think about the fact that all investments have some element of risk Even if you take something considered to be a low-risk investment there is still some risk. With investment, the risk refers to the chance that you might lose money. It is important to realise that this is not referring to the chance that you will get a return on the investment, so whether you get dividends on the shares or rental income from a home but on the risk that you will actually get the money back that you have paid in. Investments require you to buy an item, such as a home, share of a company or piece of art and the risk that you are taking is whether the value of that goes up or down. When you come to sell the item, you want to be able to make more money or at least the same amount as when you bought it. This means that you need to make sure that you invest in something that you hope will go up in value and also only use the money to invest that you are prepared to lose. Although there is always a risk, there are some things that are riskier than others.
The Higher the Risk the Higher the Return
It tends to be the case that with some investments, the more risk you are prepared to take, the more return you are likely to get from it. This means that it can be tempting to take on a high-risk investment because you want to get a high return. However, it does mean that you have a large risk that you will lose money as well. For example, if you buy a piece of art by an art student and they become hugely famous then that piece of work could worth a lot of money. However, if they never become famous then it will be worth nothing. So, although there is a chance of a huge return, there is also the risk that will not get any of your money back. When buying an item such as art or antiques, it will be wise to buy something that you like and will enjoy looking at. Then you will feel that the money is well spent as you have had pleasure from it, even if it has not increased in value. However, if you are buying shares in a company and the company goes out of business, you will not have anything to show for it.
Might need to Hold Them for Longer
With all investments, it is recommended that you hold on to them for a long time so that you can have a better chance of the value increasing. This is because the value of investments tends to go up and down a lot in the short term but in the long term this evens off. This means that holding on to it for longer means there is a bigger chance that when you sell it that the value will have gone up. It could be the case that with a higher risk investment, you will need t hold on to it longer to give it a higher chance of increasing in value. Normally, you would hold investments for at least five years and probably double that as a minimum but with higher risk ones, you may have to hold them for even longer in order to have a better chance of making money.
There are a lot of people that just feel like they cannot face budgeting. They feel that it will make them miserable. It is worth making sure that you have a full understanding of the benefits of budgeting and then you will be able to see that it is unlikely that you will actually feel that bad when you are doing it.
Will Feel in Control of Your Money
It is good to feel like you are in control of your money. By setting out a budget and therefore a spending plan, it means that you will be able to be in control of what is going on. You will plan where your money is being spent and this means that you will not find that you are reaching the end of the month with no money and wondering where it has all gone. It can be really good being able to track all spending and know that you are not wasting money on things that you do not really need or want.
Will be Able to Cover Essential Costs
It can also be really reassuring knowing that you will always have money available to pay for the essentials that you need. It can make a big difference to know that you will have the money available each month so that you can pay for those things that you need to buy. It is really good to know that you will have enough food, you will cover your rent/mortgage, fast loan repayments, tax and bills and so you will be able to go about your daily life without worrying about these basics. It can bring a reassuring feeling without that deep down worry that you might have if you are not sure whether you will be able to cover all of your essentials.
Will Be Able to Budget For Treats
You will also be able to put some of your money towards treats anyway. Hopefully, you will be able to set your budget so that you still have some money left over after you have paid for everything you need to, to put towards buying fun things and treats. You can even budget this in. So, if you want to put some money towards savings and some for repaying a loan, then you could make sure that you also leave some for treats. If you do not have enough left, then you can review what you are buying and earning to see whether there is a way to get some extra money. For example, you might be able to pay less for some of the essentials that you are buying, maybe by switching to a cheaper utility company or supermarket. You might be able to earn some more money by doing some freelance work. Finding a better-paid job, increasing your working hours, monetizing your hobby or other things like this. It can be good to have a long think about what things you might be able to do to raise some extra income.
So, there is no need for budgeting to make you feel miserable at all. In fact, Quite the opposite. You should find the fact that you are in control of your money reassuring and freeing. You will be able to feel happy that you know there will be enough money to cover your essentials and in most cases, you will also have enough money available to be able to treat yourself as well. It will mean that you will not be able to just go out and buy whatever you want when you want but the advantages of being able to meet your financial goals and have peace of mind should outweigh that.
There are a lot of people that might fear that changing banks will be really difficult. They might worry that if they want to switch to another one that it will be hard. There are a few things they might worry about but they may not necessarily be as tricky as they may first seem.
Things Could Go Wrong When Switching
There will always be a small risk that things will go wrong when you are switching accounts, but these days banks are obliged to help you out with switching and they should arrange some of the processes for you. They should be able to organise the moving over of your direct debits and standing orders, for example, which means that there should be no problems with paying bills. It is wise to make sure that you check that it has been done correctly, but this should not be too tricky. If you have an online bank account, you should be able to view them and you could even print them out and then you will be able to check on the new account of they have all been swapped over accurately. If you do not bank online then you may need to look back on your bank statements to check this and then you may need to wait for a statement from the new bank to check it, but you may be able to communicate with them in an alternative way, perhaps online, by phone or in a branch, in order to check this. It will not take too much time and effort to check this and it could be well worth making this effort if it means that you will be able to then be able to get better rates and make more money than you would if you stayed with your current bank.
The New Bank Will be Hard to Navigate
You may be concerned that things will be different with your new bank and that could make it complex to use. If you bank online, then you will need to set up a new account with them and this can take time and effort. You will need to learn how to navigate their website and how to do different things. You might need to set up telephone banking details as well and you may need to find where their branch is and get used to using that as well. However, it does not mean that this will be hard. It could be quite simple to set it all up. Banks will want to make it easy for people to do all of this as they won’t want to put them off by making it so complex that they will not want to stay with them. You will also tend to find that most systems are very similar anyway and if you can navigate one, then you will be able to do others. They will also have help available that you can use as well.
It is worth thinking about these disadvantages alongside the advantages of switching banks. There could be a lot of advantages such as being able to get a better rate of interest and having better products available. You might also find them to be a friendlier bank, easier to deal with and quicker to respond to your queries and so it could be really worth the hassle of switching. So, make sure that you calculate the financial advantages and consider other advantages as well as considering the disadvantages. It could be well worth working through the disadvantages as the advantages could well outweigh them.